The hedge fund mogul who controls Sears insists the beleaguered retailer has a bright future, even as persistent sales declines and operating losses force him to close stores and sell off assets. Earlier this year, he said Sears has "what it takes to move us forward." But investors aren't listening. Sears shares have dropped 24 percent this year to under $7 apiece, near an all-time low of $5.50, set in February, and down 96 percent from their peak value of $195.12 a decade ago.

If Lampert's storyline is true, the stock must be a bargain, right? Imagine the upside if the Hoffman Estates-based company recovers as he predicts. He could make a huge score by scooping up the 51 percent of Sears stock he doesn't already control, which is worth about $375 million at current market prices. Throw in a 10 percent buyout premium, and Lampert would pay less than $425 million to capture the full benefit of a Sears turnaround.

Of course, his hedge fund investors might object if he plows more of their money into a stock that has cost them so dearly since he took control of Sears by merging it with Kmart in 2005. And bank lenders surely would demand high interest rates and fees to finance a Sears LBO.

But why use other people's money? If Lampert is worth $1.8 billion, as Forbes estimates, he could finance the buyout himself, without borrowing or sharing the returns with co-investors.

Taking Sears private would bring other benefits, as well. Lampert's willingness to wager a bigger chunk of his personal fortune on Sears would send a strong signal to merchandise vendors that appear to be growing leery of the company. And a privately owned Sears would escape the expense and inconvenience of nettlesome Securities & Exchange Commission regulations, including a rule that recently forced the company to acknowledge uncertainty about its future as a "going concern."

Sears won't comment on Lampert's interest in such a transaction. But so far, he isn't acting like a hedge fund manager who sees unappreciated value in Sears. He rails against negative media coverage, upbraids suppliers that treat Sears "like a pariah" and bemoans bankruptcy speculation. Yet he forgoes an opportunity to buy up Sears stock at a price that reflects none of the long-term prosperity he envisions for the retailer.

"If he thought the stock was undervalued enough to make up for the downside risk, he would take it private to reap 100 percent of the upside and eliminate the cost and risk of SEC regulation and reporting," says Erik Gordon, a professor at the University of Michigan's Ross School of Business.

Sure, Lampert bought about 500,000 shares in March, steadying the stock after the "going concern" warning. But that's a rounding error for him.

Rather than double down on Sears equity, Lampert has taken steps that would strengthen his position in a Sears bankruptcy. Through various entities, he has become the company's biggest lender, advancing more than $1 billion in recent years, much of it secured by potentially valuable assets he could seize in bankruptcy proceedings.

He also stands to gain from Sears store closings through his stake in Seritage Growth Properties, a real estate company that's redeveloping former Sears locations.

Lampert may truly believe that Sears will thrive in the long-term. If he backed his optimism by taking the company private, others might believe it, too.

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